N.C. Regulator Tapped To Handle $25B Mortgage Deal

There was one little-noticed part of this week's announcement about the $25 billion national mortgage settlement. North Carolina's banking commissioner, Joseph Smith Jr., will take over a new role and serve as independent monitor. He'll oversee the five banks which agreed to new mortgage loan servicing and foreclosure standards.

Smith has spent nearly a decade as North Carolina's commissioner of banks, and he is described as a man who understands the plight of the homeowner without forgetting what makes a successful banking industry work.

Cooper was a lead negotiator in the multi-billion dollar mortgage settlement with Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial. Cooper recommended Smith for this new job, and he says the agreement has big teeth and needs a tough watch dog, someone like Smith.

"He has experience of knowing how banks operate," he says. "These issues are intricate and complicated and it is important we have someone who understands how things work. At the same time, as the North Carolina Commissioner of Banks, Joe Smith has a strong consumer protection record."

No one knows the exact details of Smith's new job. Since the mortgage crisis, he's spent much of his time defending consumers – like in 2009, before the House Financial Services Committee.

While commissioner of banks in North Carolina, Smith supported the fight to end pay-day lending and helped set up one of the country's first foreclosure prevention counseling programs.

"First of all sir, if I might say so, we've just had a financial meltdown under subprime," Smith said to the committee. "The states were all over subprime for years. No one has ever said to my knowledge that the state regulation caused the subprime crisis. In fact, if anything, the state regulation was on top of the subprime crisis before anybody else."

Smith's office declined to make him available for an interview.

Smith knows his way around the nation's capitol and has worked in Washington before, but it's also not the first time the Obama administration has called him for help. About a year ago, President Obama nominated Smith to run the Federal Housing Finance Agency that regulates mortgage giants Fannie Mae and Freddie Mac.

Smith withdrew his nomination after resistance from Senate Republicans, but now he's stepping forward again.

John Connaughton, a professor of financial economics at the University of North Carolina at Charlotte, says he would not want Smith's job. He says it is going to be a brutal process.

"Whenever we have a settlement like this ... nobody ever gets what they want," Connaughton says. "It is always a series of compromises, and as a result of that, he is going to be dealing with parties on both sides of the issue that feel they have been unfairly treated."

Smith isn't just a consumer advocate; he's also worked for a bank. But the West Virginia native won't return to D.C. to oversee the mortgage settlement. He'll set up an office in Raleigh with a team of auditors and attorneys to help with the process of divvying up the $25 billion.